The 4Ps for CCT: an innovative
program
A growing number of developing countries
have implemented conditional cash transfer
(CCT) programs, a new intervention funded by
donors that seeks to improve the health and
education status of mothers and poor children, respectively, and reduce poverty in the
long run. The CCT is a targeted transfer
program whereby cash is directly transferred
to poor household beneficiaries on condition
of doing certain activities such as keeping
children in school. This intervention rests on
the importance given to human capital in
stimulating growth and social development.
Several empirical studies have indicated that
investing in the human capital of the poor is
widely seen as critical to growth and poverty
reduction (Maluccio and Flores 2004); as a
way to break the cross-generational cycles of
poverty (Nigenda and Gonzalez-Robledo

PIDS Policy Notes are observations/analyses written by PIDS researchers on certain policy issues. The treatise is holistic in approach and aims to provide useful
inputs for decisionmaking.
The author is Senior Research Fellow at the Institute. The views expressed are
those of the author and do not necessarily reflect those of PIDS or any of the
study’s sponsors.

2

...Will conditional cash transfers yield the expected
outcomes on education, nutrition, and health? Will the
expected human capital investment outcomes be
realized? The budgetary implications of this program
are staggering and more so if funded by borrowing.

degrees of success with respect to attainment
of the program’s objectives. Recently, the
Philippine government has designed its own
version called “Pantawid Pamilyang Pilipino
Program” (4Ps), allocated a budget and
knocked on the doors of donors such as the
World Bank for supplemental funding.
The 4Ps will provide cash to targeted poor
households on condition of regular school
attendance by the households’ children and
visits to health centers by family members.
The 4Ps are based on the following rationale:
z

Investment in human capital (e.g., basic
education, health) leads to long-run poverty
alleviation. Early interventions provide much
higher returns over the lifecycle, and
z
Cash transfers have immediate impact
on poverty situation.
That poor households—which do not have the
means to improve their education and health
status—need some form of subsidies is
undeniable. That cash transfers provide
immediate relief, especially to poor households suffering from hunger and various
deprivations, is obvious.

PN 2008-09

Policy Notes

The policy question, however, is whether or
not the 4Ps constitutes an efficient and
effective instrument for providing subsidies.
More importantly, will conditional cash
transfers yield the expected outcomes on
education, nutrition, and health? Will the
expected human capital investment outcomes
be realized? The budgetary implications of
this program are staggering and more so if
funded by borrowing. In the next five years,
the government hopes to transfer cash to
500,000 poor households. It cannot do this,
though, without passing the hat to donors
since it simply does not have the resources to
fund the envisaged massive program of
conditional cash transfer.
Taxpayers will naturally be interested to know
whether the 4Ps is a worthy use of public
funds or not. Taxpayers should thus be
assured that the expected benefits would be
realized and that ignoring programs such as
the 4Ps would lead to a great opportunity loss
in making a difference in the lives of the poor
households.
This Policy Notes provides some cursory
comments on the 4Ps based on available
information on its design and coverage. While
it is too early to make an indepth assessment
of this program because it is still in its initial
stages of design, assessment of the program
should be periodically done during its lifetime. This Notes will thus raise outstanding
issues that may inform policy decisions on
program design and implementation.

3

CCT as an alternative approach
to other subsidy programs
Conditional cash transfers have an intuitive
appeal because poor households are given the
choice on the composition of their consumption bundles. They can choose what they
think is best for them in contrast to a price
subsidy for commodities such as rice or other
staple food, where the state assumes it knows
what the poor need. A generalized price
subsidy may suffer from leakages where
benefits may also accrue to the nonpoor.
Vouchers, another form of subsidy that are
quasicash, are superior to a generalized price
subsidy and are intended for the purchase of
an identified commodity or service, e.g., basic
education. The implementation of a voucher
system, though, may be too complicated for
poor households. On the other hand, cash
transfers are simpler to administer and do not
compete with private commercial effort or
even with small-scale producers of food, e.g.,
small rice farmers in the target areas. They
are also transparent and easily understood by
the taxpayers because the budget for such
transfers would have to be deliberated in
Congress. The taxpayers know the cost of a
conditional cash transfer subsidy quite unlike
the cost of nontransparent programs such as
fertilizer or rice subsidies, which may be
hidden under so-called lumpsum items or
congressional insertions. Because cash
transfers are directly given to poor households, there may be little chance of leakage
provided there is an effective targeting
mechanism, and the cash delivery system and

means for verification of actual receipt of the
cash are in place.
CCT outcomes in Latin America
In terms of impact and outcomes, there is a
growing literature on conditional cash transfer programs and their impacts in many
developing countries, especially in Latin
America. The general observation is positive:
CCTs have led to the improvement of health
and educational outcomes and have a large
potential as an instrument in the fight
against poverty because of the improvement
in human capital in poor areas where such
programs have been implemented and sustained. Some examples of CCTs are shown in
Box 1.
Some of the positive outcomes observed by
Briere and Rawlings (2006)2 are the following:
______________
2
Briere, B. de and L. Rawlings. 2006. Examining conditional
cash transfer programs: a role for increased social inclusion? Social Safety Nets Primer Series, Social Protection,
World Bank.

PN 2008-09

Policy Notes

4

(a) in education, a decrease in grade repetition from 37 percent to 33 percent in Mexico,
and from 18 percent to 13 percent in Honduras; a decrease in school dropout rates from
13 percent to 9 percent in Mexico, from 7
percent to 2 percent in Nicaragua, and from 9
percent to 5 percent in Honduras; (b) in child
labor, a reduction in labor participation of
boys in Mexico as large as 15 to 25 percent
relative to the probability of participation
prior to CCT; and (c) in household consumption and nutrition, average consumption in
the treatment group was higher by 13 percent
than that of the control group in Mexico, and
15 percent higher than the control group in
Colombia.

Geographic and household targeting. When the
CCTs were first announced and implemented
in pilot areas, certain quarters complained
that these were nothing but dole-outs, and
the transfers would only lead to a mendicant
attitude among the recipients and could be
(mis)channeled by politicians for self-serving
interest. The government, however, explained
that the targeting mechanism it uses will
ensure that only the worthy poor households
will be enrolled in the program.

Need for ‘deliberate’ haste
Notwithstanding the merits and advantages of
a CCT program as cited above, there is a need
for the government to make ‘deliberate’ haste
in rolling it out to all the target areas. It is
after all, a new program and admittedly an
expensive one to maintain. Thus, before
expanding coverage of the program, it may be
worthwhile to pause for a while and consider
the following concerns:

How effective is the government’s targeting
system? The Department of Social Welfare and
Development (DSWD) is receiving expert
advice and guidance from some academics
and donors in developing an effective targeting system. This is good because it gives an
assurance that inclusion in the 4Ps will
depend on merit and need and not on political whim. The large-scale survey to identify
target households that will be launched in
early 2009 would equip the government with
an instrument to ward off any attempt to
politicize what seems to be an effective way
to help the poor as reported by studies on
similar programs in Latin America.

How effective is the government’s targeting system? The
Department of Social Welfare and Development
(DSWD) is receiving expert advice and guidance from
some academics and donors in developing an effective
targeting system. This is good because it gives an
assurance that inclusion in the 4Ps will depend on
merit and need and not on political whim.

There are two stages in targeting: (a) targeting geographical areas; and (b) targeting poor
households. The first stage is crucial because
for the 4Ps to create an impact on poverty
reduction, the government should ensure that
the program would be deployed in the poorest
provinces and municipalities. During the
second stage, the poorest households will be

PN 2008-09

Policy Notes

5

identified through a means test that will
enable the government to limit the cash
transfer to households in most need of
assistance. Information on the selected
geographic areas and households should be
made available not only to the bureaucrats
who will implement the program but also to
policymakers and their constituents.
Presence of requisite infrastructure in targeted
areas: schools, rural health units. The 4Ps will
be a collaborative effort by the Department of
Health (DOH), Department of Education
(DeptEd), DSWD, National Anti-Poverty
Commission (NAPC), and local government
units (LGUs). While national government
agencies may be able to secure the required
funding from budgetary appropriations, the
partner LGUs, which presumably will be the
lower-income municipalities and provinces,
may find it difficult to produce counterpart
funding. Program design has to take this into
account because in the past, some LGUs,
undoubtedly the poorer ones, had wavered in
their commitment to produce counterpart
funding in foreign-funded projects, thereby
eventually leading to implementation failure.
The national government cannot expect a
uniform cost-sharing by the LGUs simply
because municipalities and provinces that
would be selected for the 4Ps do not face the
same income capacities. Some are poorer than
the others.3

While national government agencies may be able to
secure the required funding from budgetary
appropriations, the partner LGUs, which presumably
will be the lower-income municipalities and provinces,
may find it difficult to produce counterpart funding.
Program design has to take this into account because in
the past, some LGUs, undoubtedly the poorer ones, had
wavered in their commitment to produce counterpart
funding in foreign-funded projects, thereby eventually
leading to implementation failure.

attention to the availability (or lack) of
requisite infrastructure such as schools and
rural health units, among others, in the target
areas. â&#x20AC;&#x153;Infrastructureâ&#x20AC;? here means not only
the presence of these hard infrastructure but
also the availability of trained medical staff,
teachers, materials, and supplies. This is a
supply-side problem. While the demand for
those services is there, is the infrastructure,
i.e., schools and rural health units, ready and
in good condition to deliver services?
By definition, the selected municipalities/
barangays are among the poorest in the
country and thus, are unable to put up or
maintain such infrastructure. On the other
hand, the lack of infrastructure has contributed to the growth constraints of those areas
or localities. A vicious cycle thereby exists.
The 4Ps, which will require poor households
______________

Apart from an equitable policy on costsharing, policymakers should also pay equal

3
This will be an opportune time to revisit the policy on
national government-local government cost sharing (50:50)
in social and environmental projects.

PN 2008-09

Policy Notes

6

...Even if the national government and LGUs want a rapid expansion of the 4Ps, infrastructure
bottlenecks may stand in the way of a successful implementation. As such, should the national
government not lay down the requisite infrastructure first before it distributes cash to hundreds of
thousands of poor households?

to maintain children (6 to 14 years of age) in
school for an agreed-upon period of time, and
members of the households to make regular
visits to rural health units or rural health
centers, will face implementation bottlenecks
if the requisite infrastructure is absent in
target areas. But again, these geographic
areas may precisely be so poor that they
would not really have the needed infrastructure for the 4Ps to work.
Thus, even if the national government and
LGUs want a rapid expansion of the 4Ps,
infrastructure bottlenecks may stand in the
way of a successful implementation. As such,
should the national government not lay down
the requisite infrastructure first before it
distributes cash to hundreds of thousands of
poor households?
Size of the grant. Related to this is the
determination of the appropriate size of the
educational and health grant. In Latin
America, Rawlings and Rubio (2003) pointed
out that the methodology to calculate the
______________
4

Rawlings L. and G. Rubio. 2003. Evaluating the impact of
conditional cash transfer programs: lessons from Latin
America. Policy Research Working Paper 3119, The World
Bank.

PN 2008-09

Policy Notes

size of educational grants varies considerably
across countries. They indicated that in
Mexico and Honduras, the education grant
covers both direct costs (school fees, school
supplies, transportation costs) as well as
opportunity costs derived from income lost as
a result of sending children to school rather
than work. In Colombia and Mexico, educational grants for secondary schools are higher
than for primary schools to reflect the increasing opportunity cost of work as children
grow older. In Honduras, Jamaica, and Mexico,
the program package consists of cash for food
consumption and health care and nutrition
education for mothers. In Nicaragua and
Mexico, health care is given to target household members.4
What should this be for the Philippines?
Readiness of management, administrative, and
delivery structures. There is no doubt that
good-hearted men and women of the bureaucracy have the best of intentions to implement the 4Ps soonest. However, the government has to admit that a program of the scale
and scope of the 4Ps may strain the present
capacity of government agencies that also
have other programs to implement and
services to deliver. There are limited resources

7

and personnel who still have to be oriented
and trained to implement a different type of
subsidy program. Would other programs of the
government be made to give way to accommodate the 4Ps? What is the funding strategy? How can this be sustained? Can government and Congress make a long-term commitment to this innovative program?
To the governmentâ&#x20AC;&#x2122;s credit, it has piloted the
implementation of the 4Ps in a few barangays
prior to the present plan for a massive roll out
in 2009. Still, it would be best to move slowly
at first to test and try systems and procedures, train staff, and establish an effective
verification and monitoring mechanism. In
other words, making â&#x20AC;&#x2DC;deliberateâ&#x20AC;&#x2122; haste is
prudent and responsible. There is really no
need to expand sooner when the management, administrative, and delivery structures
are not really prepared for a full-scale implementation of this innovative subsidy program.
Verification of compliance and monitoring
mechanisms. Households may receive the cash
but not comply with the conditions. This is an
obvious problem in CCT programs. To ensure
that the cash subsidies will lead to the
desired health and education outcomes, the
government has to establish an efficient and
cost-effective verification and monitoring
system. For example, the government should
be able to monitor and verify whether children beneficiaries actually attend classes and
whether mothers do bring their children to
health units for checkup and immunization.

Again, to its credit, the government is
developing a computer-based system for
verification of compliance but it should
ensure that an effective, user-friendly system
will be installed in CCT areas. The government
must be sure that the LGUs collaborating in
this program would have the necessary
hardware, access to the internet, and electric
power to support the verification and monitoring apparatus once this has been developed, tested, and rolled out.
Graduation of beneficiaries from the program.
It is important to monitor, evaluate the
impact of the program, and make adjustments
in the life of the program in order to develop
guidelines or policies for the graduation of
beneficiaries from the program. If the 4Ps
would be effective, then in some future time,
there should be graduation of households
from the program. Whether or not the 4Ps will
lead to behavioral change and ultimately to
the expected human capital impact is an
empirical matter. It will depend on the
willingness of households to adhere to the

It is important to monitor, evaluate the impact of the
program, and make adjustments in the life of the
program in order to develop guidelines or policies for
the graduation of beneficiaries from the program. If the
4Ps would be effective, then in some future time, there
should be graduation of households from the program.
Whether or not the 4Ps will lead to behavioral change
and ultimately to the expected human capital impact is
an empirical matter.

PN 2008-09

Policy Notes

8

There is no need to rapidly expand coverage when
crucial program components have yet to be tested and
proven... Proceeding on a phased mode will allow the
generation of empirical evidence that will either justify
more funding and greater coverage for the 4Ps or
indicate an alternative use of resources that the
government wants to allocate for expansion in the near
future.
conditions, the effectiveness of the requisite
infrastructure, including sustained funding
support, and the length of time that the
program is implemented. A graduation policy
and the timing of its implementation should
be seriously discussed at this point of program design and not when the program is
already being implemented. If a graduation
policy is determined at a later stage of
program implementation, there could be
resistance on the part of some households
who would have developed an attitude of
entitlement. This would make the program
very costly and difficult to sustain.

Recommendations and concluding
remarks
In sum, this Notes recommends to proceed
with the program but with due caution. There
is no need to rapidly expand coverage when
crucial program components have yet to be
tested and proven, e.g., efficient targeting
and monitoring system. Proceeding on a
phased mode will allow the generation of
empirical evidence that will either justify
more funding and greater coverage for the 4Ps
or indicate an alternative use of resources
that the government wants to allocate for
expansion in the near future.
While the political calculus seems to favor a
rapid expansion of coverage, this Notes argues
that it is paramount to first establish empirical evidence about the significant role that
the 4Ps plays in producing the expected
human capital outcomes crucial for growth
and poverty reduction before a rapid expansion is even contemplated.

For further information, please contact
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